Nike TNC Case Study (Global Governance)

• Background Information


  -2013 Nike had 765 factories in 43 countries employing over 1 million workers. Nike is famous for supplying trainers, sport clothing and equipment which all feature Nike swoosh. Nike only employs 5,500people in Beaverton, Oregon (headquarters)

  
• Nike in China


  China - 260,000 employed on 206 factories in China. however, one child policy = smaller workforce so less desire to stay: harder to hire people: therefore they will have to raise salaries.

  
• Why does


  Nikeemploy people inSouth East Asia?- cheap labour =higher profits- raw materials produced locally:cheap to obtain- countries have expanding markets ascountries develop economically.- near to other countries with expanding markets, solower transport coststo these countries than from USA.- usuallylarge workforce.-slacker laws- longer work hours, poor conditions, environmental laws, cheap.

  
• Problems Nike are facing

  - accused ofpaying low wages, long hours, notproviding sufficienttraining- Nike forces working inpoor, unsafeworkingconditionsallowing supervisors toabuse workers.

  
• Solutions for Nike


  - Nike taking moreresponsibilityfor abuse of labour and now takingcareto reduce damage to environment as well.- Now inspects all Asian factories to providebetter working conditions.

  
• Benefits for LIC's


  - work = money = food/housing/water etc,stable income-improved educationand newskilledlearnt.-economy stimulated: multiplier effect - people buy things with new money, shopkeeper succeeds, money into the economy.-infrastructure built: housing for workers, centres with western shops, investment in infrastructure.- exposure to new culture.- money gained by government used to buildinfrastructure, betterhealthcare, education etc.

  
• Negatives for LIC's


  -exploitation of work force: long hours, poor conditions, low pay, labour abuse.-natural resources of country exploited: little money actually to government of host country : profits go overseas : little money reinvested in the local area.-destruction of environment: air pollution, visual pollution etc, habitats destroyed, TNC not concerned with environmental issues, will ignore environmental laws.-factories often footloose and jobs insecure: if labour costs increase, companies may move elsewhere.-over exploited of natural resources.